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Capital Markets' Debt and Structured Finance Team Arranges New Financing for Schmitt Music Building in Downtown Minneapolis

Minneapolis – November 11, 2015 – CBRE Capital Markets’ Debt & Structured Finance team ​has arranged new permanent financing for the recapitalization of the Schmitt Music Building, a downtown Minneapolis building known for its mural of a musical score from Maurice Ravel’s “Gaspard de la Nuit.”

Ben Bastian of CBRE’s Minneapolis office represented the local borrower, 219 Partners Schmitt Acquisition LLC. The borrower is owned by partners of two companies who occupy the property – Shenehon Company and Tewksbury & Kerfeld. They purchased the property in 2000 and have occupied the majority of the space ever since. The partners are committed to long-term ownership.

“CBRE is the ‘A’ team for small investors that want full access to the long term debt and structured finance markets,” said Bob Strachota, President of Shenehon Company and Chief Manager for the Borrower. “CBRE carefully evaluated and underwrote the debt capacity of our property. They realistically set our expectations and proceeded to deliver a variety of mortgage options that we could tailor to our needs. The process was professionally managed and efficiently delivered.”

CBRE Capital Markets has history with the property, previously financing the property for the same borrower in 2004. The new 10-year loan was used to retire the existing more costly bank financing 2 ½ years ahead of its original maturity date. The new loan offered 25-year amortization, moderate leverage and an interest rate of approximately 4.00 percent. The reduction in interest rate and increase in amortization compared to the previous debt provided an almost 20 percent savings in annual debt service, even with an increase in loan size. The Borrower plans to implement common area improvements with a portion of the additional loan proceeds.

“The borrower was interested in a 10-year fixed interest rate loan that would offer a competitive interest rate, provide for cash-out proceeds and provide a reduction of personal recourse as the loan amortized down. A regional bank was able to meet these requirements and allowed the borrower to lock the interest rate early with only an executed term sheet,” Bastian said.

The 38,000-square-foot Schmitt Music Building is located at 88 South 10th Street in downtown Minneapolis, across from the Target Corp. world headquarters and Target Commons. The five-story building was built in 1909 and is almost fully leased to three tenants; Shenehon Company, Tewksbury & Kerfeld and The Creative Partners Group. Over the years, the southeast side of the building has attracted national attention with its 60’ by 150’ mural of a musical score from Maurice Ravel’s “Gaspard de la Nuit.”